AT&T Wireless 2013 Annual Report Download - page 70

Notes to Consolidated Financial Statements (continued)
Dollars in millions except per share amounts
68 | AT&T Inc.
NOTE 13. SHARE-BASED PAYMENTS
Under our various plans, senior and other management
employees and nonemployee directors have received
nonvested stock and stock units. We grant performance
stock units, which are nonvested stock units, based upon our
stock price at the date of grant and award them in the form
of AT&T common stock and cash at the end of a three-year
period, subject to the achievement of certain performance
goals. We treat the cash portion of these awards as a liability.
We grant forfeitable restricted stock and stock units, which
are valued at the market price of our common stock at the
date of grant and vest typically over a two- to seven-year
period. We also grant other nonvested stock units and award
them in cash at the end of a three-year period, subject to
the achievement of certain market based conditions. As of
December 31, 2013, we were authorized to issue up to
128 million shares of common stock (in addition to shares
that may be issued upon exercise of outstanding options or
upon vesting of performance stock units or other nonvested
stock units) to officers, employees and directors pursuant to
these various plans.
We account for our share-based payment arrangements
based on the fair value of the awards on their respective
grant date, which may affect our ability to fully realize
the value shown on our consolidated balance sheets
of deferred tax assets associated with compensation
expense. We record a valuation allowance when our
future taxable income is not expected to be sufficient to
recover the asset. Accordingly, there can be no assurance
that the current stock price of our common shares will
rise to levels sufficient to realize the entire tax benefit
currently reflected on our consolidated balance sheets.
However, to the extent we generate excess tax benefits
(i.e., that additional tax benefits in excess of the deferred
taxes associated with compensation expense previously
recognized) the potential future impact on income
would be reduced.
The compensation cost recognized for those plans was
included in operating expenses in our consolidated
statements of income, as reflected in the table below.
The total income tax benefit recognized in the consolidated
statements of income for share-based payment
arrangements was $175 for 2013, compared to
$195 for 2012 and $187 for 2011.
2013 2012 2011
Performance stock units $381 $397 $388
Restricted stock and stock units 80 102 91
Other nonvested stock units (3) 12 4
Other — — 6
Total $458 $511 $489
The following table provides information for our
supplemental retirement plans with accumulated benefit
obligations in excess of plan assets at December 31:
2013 2012
Projected benefit obligation $(2,280) $(2,456)
Accumulated benefit obligation (2,227) (2,392)
Fair value of plan assets — —
The following tables present the components of net
periodic benefit cost and other changes in plan assets and
benefit obligations recognized in OCI:
Net Periodic Benefit Cost 2013 2012 2011
Service cost – benefits earned
during the period $ 9 $ 10 $ 14
Interest cost on projected
benefit obligation 101 116 126
Amortization of prior
service cost (credit) — — 2
Actuarial (gain) loss (106) 230 81
Net supplemental retirement
pension cost $ 4 $356 $223
Other Changes Recognized in
Other Comprehensive Income 2013 2012 2011
Prior service (cost) credit $ (1) $ (1) $ 6
Amortization of prior
service cost (credit) — — 1
Total recognized in other
comprehensive (income)
loss (net of tax) $ (1) $ (1) $ 7
The estimated prior service credit for our supplemental
retirement plan benefits that will be amortized from
accumulated OCI into net periodic benefit cost over
the next fiscal year is $1.
Deferred compensation expense was $122 in 2013, $118 in
2012 and $96 in 2011. Our deferred compensation liability,
included in “Other noncurrent liabilities,” was $1,118 at
December 31, 2013, and $1,061 at December 31, 2012.
Contributory Savings Plans
We maintain contributory savings plans that cover
substantially all employees. Under the savings plans,
we match in cash or company stock a stated percentage
of eligible employee contributions, subject to a specified
ceiling. There are no debt-financed shares held by the
Employee Stock Ownership Plans, allocated or unallocated.
Our match of employee contributions to the savings plans
is fulfilled with purchases of our stock on the open market
or company cash. Benefit cost is based on the cost of
shares or units allocated to participating employees’
accounts and was $654, $634 and $636 for the years
ended December 31, 2013, 2012 and 2011.